Revision under section 263 fails where trade advance is accepted after inquiry and deemed dividend treatment is not attracted.

Revision under section 263 was unwarranted because the Assessing Officer had made due inquiry and adopted a plausible view that the amount recorded in the assessee's ledger was a trade advance arising from regular business transactions, not a loan. On that basis, section 2(22)(e) on deemed dividend was held inapplicable, and the revisionary order could not be sustained.

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Issues: Whether the revision order under section 263 of the Income-tax Act, 1961 was justified on the ground that the Assessing Officer had failed to make proper inquiries into the nature of the amount received by the assessee and whether the amount was liable to be treated as deemed dividend.

Analysis: The amount was found in the assessee's ledger account as a trade advance arising from regular business transactions with the payer company. The assessee had explained that it was not a loan but advance money against supply of goods, and interest had also been paid on such advance. In these circumstances, the Assessing Officer's view that section 2(22)(e) was not attracted could not be said to be without inquiry. Since the assessment order was based on a plausible view after due inquiry, the conditions for revision under section 263 were not satisfied.

Conclusion: The revisionary order was not sustainable and the Revenue's appeal failed.

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